The Keith Mitchell-led New National Party (NNP) administration has admitted that it defaulted on a loan payment due to the British government less than three weeks ago.
THE NEW TODAY first heard of the issue through a radio programme on the Grenada Broadcasting Network (GBN) in which Roman Catholic priest, Sean Doggette was appearing with the host, veteran journalist, Lew Smith.
The church is currently leading an initiative with support from the Mitchell government to invite all the country’s creditors to a conference to arrive at new terms to deal with the national debt of $EC2.3 billion.
Grenada owes approximately £2.3 million to the United Kingdom in loans contracted in 1982 for the Maurice Bishop International Airport (MBIA) formerly known as the Point Salines International Airport (PSIA).
Under the agreement, the loan, which was refinanced in 1991, calls for government to meet its financial commitments with payments twice per year of £270,000.00 in January and July 01.
When contacted Tuesday, Press Secretary in the office of the Prime Minister, Kisha Alexander in a telephone conversation confirmed to this newspaper that the Mitchell administration had indeed defaulted on the loan payment.
She said the decision to defer payment on this financial commitment was “a deliberate one” following discussion with the UK Government of Prime Minister David Cameron.
According to Grant, as a result of the country’s financial challenges, government was forced to prioritise payments to enable the most critical to be paid as top priority.
She said that Grenada first defaulted on the loan in 2012 under the former National Democratic Congress (NDC) government of Tillman Thomas.
On March 15, less than one month after the NNP replaced Congress in its sweeping 15-0 win at the polls, the Mitchell government officially missed a loan payment to the British Government.
The new administration also defaulted on an EC$19 million dollar loan payment to U.S bondholders, which resulted in Standard & Poors downgrading the island’s credit rating to SD.
Local financial experts have blamed the former Mitchell government for borrowing loans at high commercial interest rates including a U$S100 million loan to pay off debts incurred on the first sporting stadium at Queen’s Park and which the island is currently experiencing difficulties in servicing.
Within days of his return to office following the February 19 poll, Prime Minister Mitchell announced that his administration would engage in negotiations with creditors to restructure existing debts.
In presenting the 2013 Budget of Revenue and Expenditure (holding budget), Dr Mitchell said that the Government faced a worsening fiscal situation with revenues falling short of target even as recurrent expenditure continued to rise.
The budget figures showed that at December 31, 2012, the total Public Sector debt was $2.33 billion or 108 % of GDP.
This sum is broken down as follows: Central Government debt – EC$1.92 billion; Government Guarantees – EC$409.74 million; and Total Public Sector Debt – EC$2.33 billion.
Of the debt, just over 40 per cent is owed to private creditors, 40 per cent to multilateral institutions (including $100 million to the IMF and World Bank), and under 20 per cent to other governments.